Citation Nr: 9923414
Decision Date: 08/18/99 Archive Date: 08/26/99
DOCKET NO. 98-14 080A ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Houston,
Texas
THE ISSUE
Entitlement to waiver of recovery of an overpayment of
nonservice-connected pension benefits in the calculated
amount of $13,193.00.
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
S. Belcher, Associate Counsel
INTRODUCTION
The appellant had active service from August 1954 to August
1956.
This matter came before the Board of Veterans' Appeals
(Board) on appeal from a January 1998 decision of the
Department of Veterans Affairs (VA) Committee on Waivers and
Compromises at the Houston, Texas Regional Office (RO), which
denied the waiver of recovery of pension overpayment because
it would not violate the principles of equity and good
conscience to require its collection.
In correspondence dated in January 1999, the appellant
revoked the power of attorney of his previously appointed
representative. 38 C.F.R. § 20.607 (1998). The appellant
was provided an opportunity to designate a new
representative; he did not respond.
The record does not reflect that he has submitted a timely
challenge as to the validity of the debt. But see Schaper v.
Derwinski, 1 Vet. App. 430, 437 (1991); 38 C.F.R. §
1.911(c)(1) (1998). As the Board finds the appellant did not
dispute the validity of the amount of overpayment of pension
indebtedness created, this decision is limited to the issue
of entitlement to waiver of recovery of overpayment.
FINDINGS OF FACT
1. All relevant evidence necessary for an equitable
disposition of the appellant's appeal has been obtained by
the RO.
2. The amount of overpaid nonservice-connected pension
benefits is 13,193.00.
3. The appellant was at fault in the creation of the
overpayment of nonservice-connected pension benefits because
despite the notice provided to him, he did not promptly
report the receipt of Social Security Administration (SSA)
benefits to the VA.
4. The VA was not at fault in the creation of the
overpayment of the nonservice-connected pension benefits.
5. The failure of the Government to insist upon its right to
repayment of the assessed overpayment indebtedness would
result in unjust enrichment of the appellant, inasmuch as he
accepted benefits to which he was not entitled, based on his
income.
6. Collection of that indebtedness would not defeat the
purpose of the pension benefit program, or otherwise be
inequitable.
CONCLUSION OF LAW
Recovery of the overpayment of nonservice-connected pension
benefits, in the amount of $13,193.00 would not be against
equity and good conscience. 38 U.S.C.A. §§ 5107, 5302 (West
1991); 38 C.F.R. §§ 1.963, 1.965 (1998).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Factual Background
In his November 1994 VA application for compensation or
pension, the appellant reported that he had a four-year
college degree and prior to July 1992 he worked as an
engineer, totaling $7000.00 per month in earnings. He also
indicated that he was widowed and that he had no dependents
and no monthly income.
In correspondence dated in February 1995, the RO advised the
appellant that he had been granted entitlement to pension
benefits based on his single status with no dependents and no
countable income. The RO noted that any change in marital
status, income, or number of dependents, should be reported
immediately.
In a September 1995 letter from the RO, the appellant was
advised that notification of any new income, not initially
reported, was necessary.
In a May 1997 letter from the RO, the appellant was notified
of the proposal to terminate his benefit payments due to
receipt of evidence demonstrating that his family income had
changed.
A May 1997 pre-determination notice indicates that the
appellant was in receipt of SSA benefits, effective December
1, 1995.
In a July 1997 post-determination letter, the RO reported
that based on the appellant's receipt of SSA benefits, his VA
award had been terminated, effective December 1, 1995.
According to a July 1997 declaration of the status of
dependents, the appellant reported that he had two children.
The appellant reported that he was the guardian of the eldest
child indicating that he was permanently helpless for mental
or physical reasons, and that this child had been living with
the appellant for the past two years.
In an October 1997 letter, the appellant indicated that he
believed he sent in Form 20-5655 listing his SSA benefits as
income. He also indicated that he called the RO and was
advised to file a waiver request. He stated that he needed
the money and thought he was entitled to both VA and SSA
benefits. The appellant reported that on occasion he had
worked on a temporary basis for a few weeks or months at a
time. He further indicated that one of his sons is still a
minor.
According to an October 1997 financial status report, the
appellant indicated that he was retired and unemployed;
however he worked as a taxi driver engineer from 1995 to
March 1997. He reported his SSA award as his only source of
income. He reported that his total assets amounted to
$2040.00, to include cash in the bank, cash on hand, and a
car. He further indicated that he had three dependents,
which consisted of a minor son and an adult son and his wife,
for the past two years.
According to a December 1997 letter from the appellant, he
stated that he did not report his SSA award because according
to the Social Security rules regarding income, his VA
benefits were not enough to reduce his SSA benefits. He
further reported that he thought it was not necessary to
report SSA benefits to the VA. He indicated that he was
currently in Korea visiting his son. He maintained that he
did not previously report his son and daughter-in-law as
dependents, rather he alleged that he had two dependents (two
sons), neither of which was able to work. Accompanying the
letter is a December 1997 financial status report, which
reflects that the SSA award as the appellant's only source of
income. He indicated that at the current time he was
unemployed, but worked as an engineer from May 1997 to June
1997. He further listed that his average monthly expenses
exceeded his monthly income. The appellant reported that he
was $4000.00 past due on various medical bills generated as a
result of his heart disorder. He also reported that he had
two dependents and that he worked on occasion.
In his July 1998 statement, the appellant indicated that he
was moving to Alaska for at least a month and perhaps longer.
A November 1998 financial status report is of record. The
appellant indicated that his average monthly income included
his SSA benefits and take home pay from his job as a taxi
driver. The appellant reported that he worked two-thirds of
the month as a taxi driver and up until April 1997 he worked
as an engineer in Houston, Texas. The appellant indicated
that he had two dependents and that his monthly income was
exactly the same amount as his monthly expenses.
At his November 1998 hearing, the appellant testified that in
1994, he had a major heart attack. Following the heart
attack, he stated that he was in a nursing home for almost
three months. At the time the appellant was in the hospital,
he applied for both VA pension and SSA benefits. The checks
from both the VA and Social Security reportedly arrived at
the same time. The appellant testified that he asked himself
whether it was possible to receive both benefits. He
indicated that at that time his "mind wasn't working
right," further elaborating that he lost blood to his brain
because of the heart attack. He then reported that he
thought "'well it seems to me if it was wrong to collect
both the government must have computers and catch this thing
right away, so it must be alright to collect both of them."
The appellant reiterated that he had more and more questions
about the collection of both benefits. He further stated
that he was barely getting along and had dependents,
therefore, he took the dishonest track and did not do
anything. The appellant reported that he felt it was
probably wrong to collect both benefits, but felt that that
Government agencies could talk to one another through
computers. The appellant also indicated that at the time he
filled out the form for VA benefits, he was in the hospital.
According to his September 1998 substantive appeal, the
appellant stated that the VA did not take into consideration
the fact that he had two dependents besides himself and that
the discrepancies in his reports were not relevant.
In a letter to his Congressman, the veteran indicated that
his daughter-in-law was extremely ill and needed medication
and treatment. He informed the Congressman that he was in
desperate need of money.
Pertinent Criteria
Generally, entitlement to improved nonservice-connected
disability pension exists if a appellant served in the active
military, naval or air service for 90 days or more during a
period of war; is permanently and totally disabled from
nonservice-connected disability not due to the appellant's
own willful misconduct; and meets the net worth requirements
and has an annual income not in excess of the applicable
maximum annual pension rate. 38 C.F.R. § 3.3(a)(3) (1998).
Payments of any kind and from any source are countable income
for determining eligibility for VA pension benefits, unless
specifically excluded by law. 38 U.S.C.A. § 1521(b) (West
1991); 38 C.F.R. § 3.271(a) (1998). A person who is
receiving pension benefits is required to report to the VA in
writing any material change or expected change in his or her
income, net worth, or other circumstance that affects the
payment of benefits. 38 U.S.C.A. § 1506 (West 1991 and
Supp.1998); 38 C.F.R. §§ 3.277, 3.660 (1998). Overpayments
created by the retroactive discontinuance of pension benefits
will be subject to recovery if not waived. 38 C.F.R. §
3.660(a)(3) (1998).
Recovery of overpayment of any benefits made under laws
administered by the VA shall be waived if there is no
indication of fraud, misrepresentation, or bad faith on the
part of the person or persons having an interest in obtaining
the waiver and recovery of the indebtedness from the payee
who received such benefits would be against equity and good
conscience. 38 U.S.C.A. § 5302(c) (West 1991 and Supp.
1998); 38 C.F.R. §§ 1.963(a), 1.965(b) (1998).
The standard "equity and good conscience" will be applied
when the facts and circumstances in a particular case
indicate a need for reasonableness and moderation in the
exercise of the Government's rights. The decision reached
should not be unduly favorable or adverse to either side.
The phrase "equity and good conscience" means arriving at a
fair decision between the obligor and the Government. In
making this determination, consideration will be given to the
following elements, which are not intended to be all-
inclusive: (1) The fault of the debtor, (2) balancing of
faults between the debtor and the VA, (3) undue hardship of
collection on the debtor, (4) a defeat of the purpose of an
existing benefit to the appellant, (5) the unjust enrichment
of the debtor, and, (6) whether the debtor changed positions
to his detriment in reliance upon a granted VA benefit. 38
U.S.C.A. § 5302; 38 C.F.R. § 1.965(a).
The law precludes waiver of recovery of an overpayment or
waiver of collection of any indebtedness where any one of the
following elements is found to exist: (1) Fraud, (2)
misrepresentation, (3) bad faith. 38 U.S.C.A. § 5302. The
Board's review of the record reflects that the Committee has
resolved this question in favor of the appellant, finding, in
essence, that his actions did not constitute fraud,
misrepresentation or bad faith.
Thus, the question before the Board for review is the issue
of whether the evidence establishes that recovery of the
indebtedness would be against equity and good conscience, in
which case recovery of that overpayment may be waived. 38
U.S.C.A. § 5302; 38 C.F.R. §§ 1.963, 1.965.
The Board has carefully reviewed the entire record, in light
of the appellant's contentions and the applicable law and
regulations. The Board finds that the fault of the appellant
in the creation of the overpayment indebtedness was
significant. The record shows that the overpayment of
nonservice-connected pension benefits was created by the
appellant's inaction. The appellant failed to report his SSA
award after repeated instructions to do so.
VA's working definition of "fault" is "The commission or
omission of an act that directly results in the creation of
the debt" (Veteran's Benefits Administration Circular 20-90-
5, February 12, 1990). Fault should initially be considered
relative to the degree of control the appellant had over the
circumstances leading to the overpayment. If control is
established, even to a minor degree, the secondary
determination is whether the debtor's actions were those
expected of a person exercising a high degree of care, with
due regard for the debtor's contractual responsibility to the
Government. The age, financial experience, and education of
the debtor should also be considered in these determinations.
The Board finds that the appellant's inaction directly
resulted in the creation of the overpayment indebtedness
because he did not timely notify the VA of his change in
income. A VA pension recipient must notify the VA of all
circumstances which will affect his or her entitlement to
receive, or the rate of, the benefit being paid. Such notice
must be furnished when the recipient acquires knowledge that
his or her income changed. 38 C.F.R. § 3.660(a)(1). The
evidence of record shows that the appellant had been properly
advised that the pension program was income based and that he
was under an obligation to accurately and completely report
all income and the sources thereof. Nonetheless, the
appellant did not report to the VA, in a timely manner, the
income received by him.
The appellant contends that he was not at fault in the
creation of the overpayment indebtedness. A review of the
record demonstrates that appellant's current contention as to
why he did not report his SSA award is not consistent with
his previous contention.
According to the evidence of record, the appellant began
receiving SSA benefits in December 1995. After receiving a
termination of VA benefits letter, the appellant maintained
that he believed he had updated his income status to reflect
his SSA award. However, subsequently received evidence of
record shows that the appellant conceded that he did not
report his SSA award believing that it was not necessary. At
his November 1998 hearing, the appellant stated that it
seemed okay to collect both VA and SSA benefits because the
Government's computers did not catch the mistake. The Board
notes that the appellant had received numerous letters
advising him to report any new income. In fact,
correspondence dated in September 1995 provided written
instructions as to accurately reporting new income and made
specific reference to Social Security benefits. The
appellant, at his hearing, stated that he felt it was
probably wrong to collect both benefits, but felt that the
Government had an obligation to catch the mistake. He
blatantly admitted that he took the "dishonest track" by
not reporting the new income.
The VA notified the appellant, in a timely manner, of the
award of the nonservice-connected pension benefits and sent
the appellant's correspondence to the address provided by the
appellant. The VA based the award of nonservice-connected
pension benefits upon information that was provided by the
appellant. The Board notes that the appellant's income for
the period in question was at a level which did not permit
payment of pension, and had he provided notice of his SSA
award to the VA, the running award of pension would not have
been continued. Thus, all fault in the creation of the debt
rests with the appellant and the Board finds that the VA was
not at fault in the creation of the overpayment indebtedness.
The Board has also considered whether recovery of the
overpayment would defeat the original purpose of the benefit,
by nullifying the object for which it was intended. Pension,
as noted above, is an income-based program, intended to
provide a basic level of support for veterans with wartime
service. Recovery of those amounts to which the appellant
was not entitled would not defeat the purpose of the benefit.
This would not affect the appellant's other sources of
income, including Social Security benefits. On the other
hand, the failure of the Government to insist upon its right
to repayment of this debt would result in his unjust
enrichment at the expense of the Government. The appellant,
in this case, did not, according to the available record,
change his position to his detriment and as a result of the
award of pension.
The Board also has considered whether the granting of a
waiver would provide an unjust enrichment to the appellant.
The Board finds that the appellant would be unjustly enriched
if a waiver of the pension overpayment in the amount of
$13,193.00 was granted. The VA was not at fault in the
creation of indebtedness and has absorbed a substantial loss.
The appellant made no efforts to reduce the financial loss to
the Government. It appears from the evidence of record that
the appellant has money to visit his son in Korea and travel
to Alaska and help his adult son and adult daughter-in-law
financially, while making no effort to reduce the financial
harm to the Government
In light of the above, the Board has determined that the
appellant was at fault in the creation of the overpayment.
The Board also finds that the VA was entirely without fault,
but has absorbed a substantial loss in this transaction. The
Board finds that the appellant made no effort towards
minimizing the amount of the indebtedness and would be
unjustly enriched if a waiver was granted.
Finally, the Board must analyze whether recovery of the
overpayment from the appellant would result in undue
financial hardship. The appellant asserts that he is unable
to repay the overpayment because he is unemployed. Despite
the appellant's reported unemployed status, he has
consistently reported occasional work as a taxi
driver/engineer. Moreover, the Board notes that there are
numerous inconsistencies contained in his financial status
reports. Earlier financial status reports reveal that the
appellant reported his expenses based on two dependents. He
maintained that he had two dependent sons, one of which is an
adult and mentally deficient. Apparently, the appellant
attempted to prove that he had guardianship of his eldest son
in 1997 by providing evidence that only proved he had
guardianship of his eldest son in 1975 when his son was, in
fact, a minor. Subsequently, the Board notes that in October
1997, the appellant changed the number of dependents to
three, to include the eldest son's adult wife. Two months
later, in December 1997, the appellant stated that he only
had two dependents, explaining that he only reported his two
sons to the Internal Revenue Service.
The appellant is reminded that he is expected to accord a
Government debt the same regard given any other debt.
Despite the appellant's unemployment status, he, in the past,
has worked as a taxi driver to supplement his SSA award. The
Board recognizes that payment of the debt will be a financial
strain on the veteran's limited resources, but he should be
able to pay it over time with prudent budgeting. Moreover,
the appellant's fault in creating the debt and his unjust
enrichment if the debt were not collected, outweighs any
financial hardship exhibited.
Based on the record in this case, the Board is not persuaded
that recovery of the overpayment at issue would be unfair,
unconscionable, or unjust. This is so, particularly since
the appellant continued to accept VA pension along with his
SSA award. The Board finds, therefore, that under the
principles of equity and good conscience, taking into
consideration all of the specifically enumerated elements of
38 C.F.R. § 1.965(a), it would not be unfair to recover the
appellant's overpayment indebtedness in the amount of
$13,193.00. The end result would not be unduly favorable or
adverse to either the Government or the appellant. The
evidence
in this case is not so evenly balanced that there is doubt as
to any material issue. 38 U.S.C.A. § 5107(b).
ORDER
Entitlement to waiver of recovery of an overpayment of
nonservice-connected pension benefits in the calculated
amount of $13,193 is denied.
THOMAS J. DANNAHER
Member, Board of Veterans' Appeals